Bud's Poem Page
  Katie's Coast2Coast Blog
Lemley Yarling Management Co
309 W Johnson Street
Apt 544
Madison, WI 53703
Bud: 312-925-5248       Kathy: 630-323-8422

September 30, 2011

Model Portfolio Value As of 30 September 2011

$ 487,663

September 29, 2011

Model Portfolio Value As of 29 September 2011

$ 506,256

Comment on Model Portfolio activity

Yesterday we sold Dell and bought Sprint and Micron with the proceeds. Micron is not acting well ahead of earnings tonight and we sold our trading position for a 50 pennies loss which equals 1/3rd the gain on the Dell trade. We switched Newell to Juniper as a more aggressive investment and reduced our Ciena position in some accounts.


September 28, 2011

Model Portfolio Value As of 28 September 2011

$ 499,132

Comment on Model Portfolio activity

On Tuesday Walgreen reported an excellent quarter but also reported that it had not resolved its disagreement with Express Scripts and the shares fell in trading. We repurchased shares sold before earnings and added shares to accounts.

(Business Wire) Walgreen Co. Reports 6.5 Percent Increase in Fourth Quarter Sales; Adjusted Earnings Per Diluted Share Increase to 57 Cents in Quarter, Excluding Gain from Sale of Walgreens Health Initiatives; and GAAP Earnings Per Diluted Share Increase to 87 Cents

Fiscal 2011 sales increase 7.1 percent to $72.2 billion, while adjusted earnings per diluted share reach $2.64, excluding after-tax gain from sale of Walgreens Health Initiatives, and GAAP earnings per diluted share reach $2.94

Company fills one in five retail prescriptions in America, filling a record 819 million prescriptions in fiscal 2011, an increase of 41 million or 5.3 percent over previous year

Completes Rewiring for Growth initiative, exceeding goal of $1 billion in annual cost savings

Returns $2.4 billion to shareholders through dividends and share repurchases in fiscal 2011, including significant dividend increase in July and new $2 billion share repurchase Program

Investors’ Intelligence: Bulls 38%, Bears 40%. Those numbers –counterintuitively – are bullish.

Surprise, the number was solid.

The headline number fell just 0.1% compared to 0.2% expected.

More importantly, the number ex-aircraft jumped 1.1% vs. expectations of 0.4%.

None of the numbers are AMAZING or anything, but they're not horrible, which is key.

The full report can be downloaded here at the Census Bureau..

Markets are still modestly higher.

Read more:

We switched Dell (third short profit this year- for a change) to Micron and Sprint.


September 26, 2011

Model Portfolio Value As of 26 September 2011

$ 504,982

Comment on Model Portfolio activity

(Reuters) - American Eagle Outfitters  shares rose 10 percent after chairman Jay Schottenstein bought a million shares of the teen clothes retailer, boosting investor confidence in the stock. A regulatory filing on Friday showed Schottenstein bought the shares for about $11.2 million. Director Michael Jesselson also paid about a million dollars for 120,000 shares of the company, which has been looking for a CEO for more than six months now.

"It's not just the buying of the stock, which is obviously good news ... the actual purchasing by insiders leads a lot of investors to believe that the stock is undervalued at these prices," said William Lefkowitz, an options strategist at New York-based brokerage vFinance Investments.

We repurchased Aéropostale in accounts at $9.85 down from our last sale price of $17.80. Needless to say the bears have been shorting this stock for the last few months but it is now at a level where the risk /reward is compelling.

Gold as a safe hedge against volatile stocks- how is that going these days?




September 23, 2011

Model Portfolio Value As of 23 September 2011

$ 491,995

Comment on Model Portfolio activity

CNBC has an hour interview with Meg Whitman and Raymond Lane the CEO and Chairman respectively of Hewlett Packard. We were impressed. Obviously they won’t recover the value in the franchise overnight but they explained the computer division is integral to their forward thinking and that satisfied our qualms. There is great value at these levels in the company. Hopefully this new leadership can recover.

The discussion afterwards was mostly talking heads looking for negatives to exploit. Reminds me of the WSJ attacks on IBM in the mid-1990s when Lou Gerstner took over as the stock was diving and reporters were writing that IBM was finished.

As a result of the interview we sold Cisco and placed the funds in HPQ. We purchased 5% lower than we sold yesterday. Our take is that HPQ has at least twice the upside from here as Cisco with only slightly more downside risk.

Kleiner Perkins Caufield & Byer:


Kleiner Perkins Caufield & Byers (KPCB) is a world leading venture capital firm located on Sand Hill Road in Menlo Park in Silicon Valley. The Wall Street Journal has called it one of the "largest and most established" venture capital firms in the world.[1] The New York Times has called it "one of Silicon Valley’s top venture capital providers," and said that it is "one of Silicon Valley's most prominent venture capital firms."[2][3] Reuters news service has called KPCB "one of the most successful venture capital firms in the world."[4]

KPCB specializes in investments in incubation and early stage companies.[5] Since 1972, KPCB has supported hundreds of entrepreneurs in building over 475 companies, including such major names as Amazon.com, Sun Microsystems, Electronic Arts, Genentech, Intuit, AOL, Genomic Health, Verisign, and Google.[6] More than 150 of the firm's portfolio companies have gone public.[7] Its team includes the world leading venture capitalist John Doerr; Sun Microsystem's co-founder Bill Joy; NASA rocket scientist K. R. Sridhar; former US Vice President Al Gore; and former US Secretary of State Colin Powell.[8]

The firm is based in Menlo Park, California. It has offices in Shanghai, China and in Beijing, China.[9]

The company has been an early investor in more than 300 IT (information technology) and biotech firms, over the past thirty five years, including: Amazon.com, America Online, Brio Technology, Compaq, Electronic Arts, Flextronics, Genentech, Google, Intuit, Lotus Development, LSI Logic, Macromedia, Netscape, Quantum, Segway, Sun Microsystems, and Tandem.[19] Current private investments include EEstor, Vertica, Chegg, Shopkick, Zynga, Ocarina Networks, Plum District, Cooliris, and OptiMedica.

KPCB paid $4 million in 1994 for around 25% of Netscape and profited from Netscape's IPO and subsequent $4 billion acquisition by America Online. An investment of $8 million in Cerent was worth around $2 billion when the optical equipment maker was sold to Cisco Systems for $6.9 billion in August 1999.

In 1999, Kleiner Perkins and Sequoia Capital paid $25 million for 20% of Google—as of November 2008 Google's market capitalization stood at about $108 billion. As initial investors in Amazon.com KPCB scored returns of over 55,000% at the December 1999 peak of that stock, although the value of that investment was subsequently reduced by downturns in Amazon.com's stock price.

In March 2008, KPCB announced the iFund, a $100 million venture capital investment initiative that funds innovators developing applications, services, and components for Apple’s iPhone and iPod touch platform, including Shopkick, ngmoco, Booyah and Shazam. KPCB's other mobile initiatives also include an investment in InMobi, a mobile ad network based out of Bangalore. KPCB doubled their iFund investment in April 2009 to $200 million.[20]

In April 2008, it was reported that KPCB was raising funds for a $400 million growth-stage clean-technology fund.[21] In October 2010, KPCB has launched a new $250 mn fund called sFund to fund the startups in the social space with Facebook, Zynga and Amazon.com as its co-investors. [22]

These folks know what they are doing and they know TECH. Lane is managing partner and that fact provides comfort.

We sold Molex, Symantec, Lowes, and Southwest Air for scratch to use the funds elsewhere in more aggressive stocks.

The S&P 500 tested 1120 again this morning and held closing at 1134. Little steps.


September 22, 2011

Model Portfolio Value As of 22 September 2011

$ 484,414

Comment on Model Portfolio activity


If you can keep your head when all about you
   Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
   But make allowance for their doubting too;
If you can wait and not be tired by waiting,
   Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
   And yet don't look too good, nor talk too wise:

If you can dream -- and not make dreams your master;
   If you can think -- and not make thoughts your aim;
If you can meet with Triumph and Disaster
   And treat those two imposters just the same;
If you can bear to hear the truth you've spoken
   Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
   And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
   And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
   And never breathe a word about your loss;
If you can force your heart and nerve and sinew
   To serve your turn long after they are gone,
And so hold on when there is nothing in you
   Except the Will which says to them: "Hold on!"

If you can talk with crowds and keep your virtue,
   Or walk with Kings -- nor lose the common touch,
If neither foes nor loving friends can hurt you,
   If all men count with you, but none too much;
If you can fill the unforgiving minute
   With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
   And -- which is more --
you'll be a Man, my son!

  And –which is more--you’ll be a woman own! (RJL for the women in my life)

Rudyard Kipling (1865 - 1936)

Source: "If," poem written 1895; first published in Rewards and Fairies, 1910


Ugh!! Welcome to the first day of Fall. Unfortunately the markets decided to take the word literally after the Fed announcement yesterday and Asia and Europe joined (or caused)   the panic. On the bright side Oil prices are lower (closed at $80) so the 75% of folks who don’t have significant stock holdings are going to benefit from this sell off at the gas pump-maybe.

We didn’t see this one coming but with the HFT folks providing the only action trends both ways continue to be exacerbated.

Europe can’t get its act together but at least they aren’t going to war with each other as they did in past centuries.

The markets have decided that bank stocks will remain places of pain for investors. Tech stocks have displayed strength whenever a rally has occurred in the last few weeks. With this in mind we sold JP Morgan and Fifth Third. The only financials we now hold are Huntington Bank, The Hartford, and Northern Trust- which we purchased yesterday.

With the proceeds we bought additional Ciena, JDSU, Briggs& Stratton and U.S. Steel. We sold our small position in Walgreen ahead of next Tuesday’s earnings. In this market good earnings will be a non-event and bad earnings will be punished.

We sold Hewlett Packard since the company is again a soap opera. The mention of Meg Whitman as CEO is a nonstarter for us. We placed the funds in Alcoa back to its 2 year low and Dell who know what they are doing in the computer service space.

Our rationale for holding financials had been that they would lead the markets higher but now that banks supposedly can’t trade for their own accounts and because the Fed twist action is going to hurt bank earnings on the interest spread the banks will be laggards not leaders.

As the trading day began today S&P futures were down almost 3% (6% in the last two hours of trading) at the 1120 support level that has held four times in the last 7 weeks. If it fails then 1104 is the next major support level.

Level playing field?

Shares of Goodrich Corp.were up nearly 4 percent Tuesday, rising for the third straight day of trading. The increase is linked to speculation United Technologies Corp. is looking to buy Goodrich. Goodrich (NYSE:GR) closed Tuesday at $111.82, up $4.22. That followed a 15 percent jump on Monday and a 7 percent increase on Friday.

United Technologies Corp. said late Wednesday that it is buying aerospace manufacturer Goodrich Corp. in a deal valued at $18.4 billion, including the assumption of $1.9 billion in debt. The deal had been rumored for days, sending Goodrich's shares soaring. The stock was up more than 11 percent to $122 in aftermarket trading after word of the deal broke Wednesday.

At the end of the day we decided to take a 15 pennies loss on the Alcoa we bought today, we already have a position in it and buy an equal amount of Ford. We didn’t charge commission on the transactions. Ford is just too cheap.

The trading kids bought the DJIA back from down 500 in the last hour to down 390 at the close. Small favors.

The S&P 500 closed at 1130, above –by not much- the 1120 support level which was breached for few minutes in the last hour- stay tuned- we will post again tomorrow.


September 16, 2011

Model Portfolio Value As of 16 September 2011

$ 538,021

Comment on Model Portfolio activity

We switched Applied Materials at a small profit to Ciena.

FREE ENTERPRISE, n. A system in which a few are born owning billions, most are born owning nothing, and all compete to accumulate wealth and power. If those born with billions succeed, it is due to their personal merits. If those born owning nothing fail, it is due to their personal defects.

The Devil's Dictionaries (Second Edition, revised & expanded)


September 14, 2011

Model Portfolio Value As of 14 September 2011

$ 530,719

Comment on Model Portfolio activity

We bought more Huntington Bank and also initiated positions in JDS Uniphase and Ciena. We switched Morgan Stanley to JP Morgan to improve quality while maintaining our financial exposure (both have had similar percentage moves this year) and sold Dell for plus scratch and bought Alcoa with the proceeds.

JDS Uniphase Corporation provides communications test and measurement solutions, and optical products for telecommunications service providers, wireless operators, cable operators, network-equipment manufacturers, and enterprises worldwide. The company’s Communications Test and Measurement segment supplies instruments, software, and services to enable the design, deployment, and maintenance of communication equipment and networks. Its product portfolio consists of test tools, platforms, software, and services for wireless and fixed networks. The company’s Communications and Commercial Optical Products segment offers components, modules, subsystems, and solutions that are used by communications equipment providers for telecommunications and enterprise data communications. This segment’s products comprise transmitters, receivers, amplifiers, ROADMs, optical transceivers, multiplexers and demultiplexers, switches, optical-performance monitors and couplers, splitters, and circulators, which enable the transmission of video, audio, and text data through fiber-optic cables. It also provides various laser products, including diode, direct-diode, diode-pumped solid-state, fiber, and gas lasers for micromachining, materials processing, bioinstrumentation, consumer electronics, graphics, medical/dental, and optical pumping; and photovoltaic products, such as concentrated photovoltaic cells and receivers for generating energy from sunlight, as well as fiber optic-based systems for delivering and measuring electrical power. The company’s Advanced Optical Technologies segment offers optical solutions for security and brand-differentiation applications; and thin film coatings for a range of public and private-sector markets. This segment also provides multilayer product-security solutions that deliver overt, covert, forensic, and digital product and document verification. JDS Uniphase Corporation was founded in 1979 and is headquartered in Milpitas, California.

Ciena Corporation provides communications networking equipment, software, and services that support the transport, switching, aggregation, and management of voice, video, and data traffic. Its optical service delivery and carrier Ethernet service delivery products are used, individually or as part of an integrated solution, in networks operated by communications service providers, cable operators, governments, and enterprises worldwide. The company is a network specialist targeting the transition of disparate, legacy communications networks to converged, next-generation architectures, better able to handle increased traffic, and to deliver a mix of high-bandwidth communications services. Its products, along with its service-aware operating system and unified service and transport management, enable service providers to deliver critical enterprise and consumer-oriented communication services. The company’s product offering, together with its professional support and consulting services, seeks to address the business and network needs of its customers. It creates business and operational value for its customers by enhancing network productivity, reducing operating costs, and enabling new and integrated service offerings. The company also provides consulting and support services, including network analysis, planning, and design; network optimization and tuning; project management; deployment; and maintenance and support services. Ciena Corporation was founded in 1992 and is based in Linthicum, Maryland.


September 12, 2011

Model Portfolio Value As of 12 September 2011

$ 515,091

Comment on Model Portfolio activity

The markets opened down 1% and more and when they rallied back to even after an hour of trading we made more adjustments to accounts by reducing our GE position, selling the Financial ETF (XLF), and Intel. We also sold Deutsch Telecom and reinvested the proceeds in GM and Repurchased Nokia $1 below our last sale price.

GE is at a value price but with the volatility in the markets and the confusion in Europe we decided to get a bit more cash in accounts in case the S&P 500 decides to break the 1111 level to the downside. If it does the next level is 1104. We still have a 5% and more position in GE in accounts which we will maintain. We have been trading XLF and we plan to use the Intel money to be more aggressive in the tech area with a few more stocks like Nvdia.

The European Central Bank can solve the crisis by purchasing Spanish and Italian debt (see Krugman below); the problem is that unlike  to Fed where the Chainman is the de facto decider,  there are 4 independent folks n the ECB who have divergent interests and different agendas. And so the miasma continues and markets swoon.

Value is in the markets and time will resolve the crisis—it always does.

This Is What a Market Bottom Looks Like

By Jeff Saut Sep 12, 2011 11:30 am

Market bottoms tend to be formed in a whippy, violent manner, and that's exactly what is happening now.

"I felt a great disturbance in the force ... as if millions of voices suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened." Clearly a line uttered by Obi Wan Kenobi in the movie Star Wars, but how appropriate given our sense for the past few weeks that something is/was out of balance in the universe. Whether it is an Argentine default, another Long Term Capital Management (or LTCM) hedge fund debacle, a Japanese banking implosion, etc. is not really the point. The point is something is out of balance in the cosmos! We have opined that the current situation is reminiscent of the summer of 1998 when the stock market slid into the end of August and then dove 513 points on August 31st, setting up a decent tradable low. At that time nobody knew the reason for said slide -- news of the LTCM implosion didn’t surface until weeks later. Indeed, something is out of balance."

I penned those words on September 10, 2001, 24 hours before “a day that will live in infamy.” I revisit them today not just in memory of the friends I lost on 9/11, but because for the past few months something again feels out of balance in the universe, a sense that is being reflected in the equity markets.

One of the things affecting the country’s “balance” was the budget fracas, which surfaced the dysfunction of our government. It also increased the burgeoning “confidence crisis” our nation is feeling punctuated by last Friday’s freefall in the Dow. That Dow dive was partly in response to President Obama’s innocuous $447 billion jobs speech. In that speech he said “(you should) pass the jobs bill” 16 times...

Interestingly, the Republicans chose not to respond to the president’s speech with the typical post-address rebuttal. That decision sparked this vitriolic verbiage from House Minority Leader Nancy Pelosi: “The Republicans' refusal to respond to the president's proposal on jobs is not only disrespectful to him, but to the American people.” That night the US Senate did indeed vote to increase the debt ceiling by another $500 billion to fund the “jobs bill,” proving the entire budget angst of a month ago was a sham. And while the Republicans didn’t respond to the president’s speech, the stock market certainly did on Friday.

Also affecting the country’s “balance” has been the European mess. In last Tuesday’s written strategy comments I stated that the European event of the week would be Wednesday’s ruling by Germany’s Constitutional Court regarding the legality of the various bailouts. As expected, the court ruled the rescue plans were legal, which lifted the Dow by some 275 points on Wednesday. However, what went largely unreported were the court’s qualifications making future bailouts more difficult. One such clause apparently kills the issuance of Eurobonds. Subsequently, on Friday rumors swirled on the world’s bourses that Greece was going to default over the weekend and the rout was on; and as stocks slid, the US Dollar Index soared, the 10-year Treasury yield broke below 1.9%, and gold rose. The result left the dollar at a new reaction high and technically in a bull market by breaking out of a bottoming formation in the charts that looks strikingly similar to what it did before the Lehman bankruptcy. While it isn’t surprising the dollar’s strength helped buoy bonds, it is surprising that gold rallied along with the dollar.

An Impeccable Disaster


On Thursday Jean-Claude Trichet, the president of the European Central Bank or E.C.B. — Europe’s equivalent to Ben Bernanke — lost his sang-froid. In response to a question about whether the E.C.B. is becoming a “bad bank” thanks to its purchases of troubled nations’ debt, Mr. Trichet, his voice rising, insisted that his institution has performed “impeccably, impeccably!” as a guardian of price stability.

Indeed it has. And that’s why the euro is now at risk of collapse.

Financial turmoil in Europe is no longer a problem of small, peripheral economies like Greece. What’s under way right now is a full-scale market run on the much larger economies of Spain and Italy. At this point countries in crisis account for about a third of the euro area’s G.D.P., so the common European currency itself is under existential threat.

And all indications are that European leaders are unwilling even to acknowledge the nature of that threat, let alone deal with it effectively.

I’ve complained a lot about the “fiscalization” of economic discourse here in America, the way in which a premature focus on budget deficits turned Washington’s attention away from the ongoing jobs disaster. But we’re not unique in that respect, and in fact the Europeans have been much, much worse.

Listen to many European leaders — especially, but by no means only, the Germans — and you’d think that their continent’s troubles are a simple morality tale of debt and punishment: Governments borrowed too much, now they’re paying the price, and fiscal austerity is the only answer.

Yet this story applies, if at all, to Greece and nobody else. Spain in particular had a budget surplus and low debt before the 2008 financial crisis; its fiscal record, one might say, was impeccable. And while it was hit hard by the collapse of its housing boom, it’s still a relatively low-debt country, and it’s hard to make the case that the underlying fiscal condition of Spain’s government is worse than that of, say, Britain’s government.

So why is Spain — along with Italy, which has higher debt but smaller deficits — in so much trouble? The answer is that these countries are facing something very much like a bank run, except that the run is on their governments rather than, or more accurately as well as, their financial institutions.

Here’s how such a run works: Investors, for whatever reason, fear that a country will default on its debt. This makes them unwilling to buy the country’s bonds, or at least not unless offered a very high interest rate. And the fact that the country must roll its debt over at high interest rates worsens its fiscal prospects, making default more likely, so that the crisis of confidence becomes a self-fulfilling prophecy. And as it does, it becomes a banking crisis as well, since a country’s banks are normally heavily invested in government debt.

Now, a country with its own currency, like Britain, can short-circuit this process: if necessary, the Bank of England can step in to buy government debt with newly created money. This might lead to inflation (although even that is doubtful when the economy is depressed), but inflation poses a much smaller threat to investors than outright default. Spain and Italy, however, have adopted the euro and no longer have their own currencies. As a result, the threat of a self-fulfilling crisis is very real — and interest rates on Spanish and Italian debt are more than twice the rate on British debt.

Which brings us back to the impeccable E.C.B.

What Mr. Trichet and his colleagues should be doing right now is buying up Spanish and Italian debt — that is, doing what these countries would be doing for themselves if they still had their own currencies. In fact, the E.C.B. started doing just that a few weeks ago, and produced a temporary respite for those nations. But the E.C.B. immediately found itself under severe pressure from the moralizers, who hate the idea of letting countries off the hook for their alleged fiscal sins. And the perception that the moralizers will block any further rescue actions has set off a renewed market panic.

Adding to the problem is the E.C.B.’s obsession with maintaining its “impeccable” record on price stability: at a time when Europe desperately needs a strong recovery, and modest inflation would actually be helpful, the bank has instead been tightening money, trying to head off inflation risks that exist only in its imagination.

And now it’s all coming to a head. We’re not talking about a crisis that will unfold over a year or two; this thing could come apart in a matter of days. And if it does, the whole world will suffer.

So will the E.C.B. do what needs to be done — lend freely and cut rates? Or will European leaders remain too focused on punishing debtors to save themselves? The whole world is watching.


September 9, 2011

Model Portfolio Value As of 9 September 2011

$ 511,816

Comment on Model Portfolio activity

CNBC reported that 19 of the last 23 trading days have had market moves of more than 1%. A bunch of days have had market moves of over 3%.

The G7 meets over the weekend and rumors today have European banks blowing up. Who knows?

If the market had closed for the week on Wednesday each of the last two weeks our accounts would be up 5% more than they are at the closing tonight.

Gold closed lower today even though markets tanked.

We do know that the stocks we own are at attractive levels based on financial fundamentals.

We added JP Morgan at $32.80 and Ford warrants at $2.45. We realized scratch profits in KBE and KRE and used part of the money for JPM and part to repurchase Fifth Third Bank at $9.87.


September 8, 2011

Model Portfolio Value As of 8 September 2011

$ 526,098

Comment on Model Portfolio activity

We bought Lowes, Applied Materials, and Southwest Airtimes today.

Lowes is off 10% in the last month and is on a multiyear low after missing on sales and earnings for the quarter. Home Depot is firing on all cylinders and Lowes is playing catch-up. The below $20 level is a level from which it has bounced higher in the past when the same circumstances applied.

Applied Materials has a 3% yield; sells at less than one times sales and has $4 per share in cash on hand with a share price of $11. We guess tech stocks are the new utilities.

We haven’t owned an airline stock since the 1980s but Southwest is priced at less than sales and cash equals debt. LUV has never been this cheap on a financial fundamentals basis. (What a quaint concept.) They have the reservation model for the future.

Shares of Cisco Systems and Juniper Networks traded up Thursday morning, after an analyst upgraded both stocks to buy ratings, citing improved prospects for new products.

Sandeep Shyamsukha of Auriga cited company’s improved competitive posture and market trends that play to its strengths. The stock has lost more than 20% this year as missteps and growing competition have hurt its growth prospects.

On Cisco, Shyamsukha his rating from hold, arguing in a note that the company was “poised to regain momentum through a combination of improving product cycles, aggressive pricing and superior execution.”

Cisco shares had taken hit earlier in the year, amid worries that the company had been pushing too aggressively into new markets at the expense of its core networking business. The company recently embarked on moves meant to sharpen its focus, which appear to have paid off; Cisco shares have risen more than 6% over the past three months.

Shyamsukha argued that San Jose, Calif.-based Cisco is “now well positioned to gain market share in key segments like switching, routing and servers in both enterprise and service provider segments from competitors like Hewlett-Packard HPQ -0.50%  and Juniper Networks.”

The analyst said that while “weaker macro trends” will limit Cisco’s growth, the company is poised “to outgrow the competition over the next year.” Cisco is also bound to get a lift from the shift to cloud computing, the trend in corporate IT in which businesses access computing power through a network instead of in-house data centers.

“Our more recent industry conversations suggest that private cloud/enterprise data centers are more likely to stick to traditional equipment vendors like Cisco,” Shyamsukha wrote.

Meanwhile, Cisco’s push into the blade server market may also gain traction, Shyamsukha said, adding, “We also expect Cisco to gain substantial market share in blade servers due to ongoing turmoil at its largest competitor, H-P.”

H-P recently announced big changes, including a possible spin-off of its personal computer business, that sparked a major sell-off of H-P shares. The stock has fallen more than 40% since the beginning of the year, and more than 30% in the past three months.

Shyamsukha also upgraded Juniper to buy from hold, saying the stock is “attractively valued at current levels which offsets our near-term concerns around intensifying competition and share losses.”


September 7, 2011

Model Portfolio Value As of 7 September 2011

$ 533,486

Comment on Model Portfolio activity

We added Symantec and Urban Outfitters to accounts. Urban is on an 18 month low after reporting same store sales for the first half of the year down 3%. With the yo-yo markets we sold Fifth Third, JPM and Micron for gains. We also sold Pep Boys for a scratch after it bounced back above our cost price on earnings.


September 6, 2011

Model Portfolio Value As of 6 September 2011

$ 511,189

Comment on Model Portfolio activity

It’s difficult to keeps one’s mind when all about are losing theirs.

Buy fear sell greed.

A year ago talking heads were suggesting that the dollar was finished as the reserve currency soon to be replaced by the euro. This week the talking heads are talking disarray in Europe and the uncertainty of who will keep the euro as their currency.

A month ago the markets tanked when S&P downgraded U.S. Treasuries. Today the Treasury ten-year made a high in price by recording a record low yield under 2%. It never ever has traded at that high a price/low yield. And so what does the downgrade mean and why the sell off?

The talking heads are making a big deal of 0 employment growth. Had the Verizon strike been settled by the counting day –the 12th of the month- employment would have been up 42,000. The lousy employment numbers are the result of Governments- federal, state and local- firing folks. Supposedly the markets wanted this action to reduce government spending but then react negatively when the want is fulfilled.

Obama speaks on Thursday as the lead into the Green Bay Packers opening the NFL season. Glad the priorities are straight.

We decided to lower our Ford exposure by selling the common shares (we hold the warrants that still give us a potential 10% plus exposure in most accounts to Ford) and employing the funds generated to expand our diversification. We also sold AT&T to move the funds to more aggrieve issues as the markets again test the 1112 support level.

We bought the KBE (Major Bank ETF), KRE (Regional Bank ETF), XLF (Financial ETF), and repurchased JP Morgan, Disney, and Briggs & Stratton 10% lower than where we sold last week. We repurchased Juniper 20% below last month’s sale price and Hewlett Packard 30% below the sale price of 31 days ago.

A month ago the lead underwriter Goldman Sachs said the price offered to the public and to the company was fair. A month later Goldman says no, no, no.

(CNBC) Shares of Dunkin' Brands slid in trading Tuesday after Goldman Sachs, the lead underwriter of its initial public offering, initiated coverage with a 'sell' rating.


September 2, 2011

Model Portfolio Value As of 2 September 2011

$ 515,559

September 1, 2011

Model Portfolio Value As of 1 September 2011

$ 530,142

Comment on Model Portfolio activity

It’s time for a pullback to solidify the rally. We raised a bit of cash by selling JP Morgan, Merck, Disney, Briggs & Stratton, and Nokia.

So Obama and Boehner were, like, posting stuff on each others' facebook. And Obama was all, I wanna talk with a bunch of you guys about jobs and stuff because we need to get our duffs and do something or we're gonna lose the apartment. Can you guys come listen and act like you care? And then Boehner was like, no way man, we've got a little party thing we're doing, gonna have some beers with our buddies and make fun of you. Plus we're not gonna be home, dude, we told you that, like, weeks ago. And then Obama was all, oh wait, really? I'm sorry guys. My bad. How's about, like, the next night? And then Boehner and his friends were all, like, sure man, but that's like, the first night of football, so we'll totally be paying attention to whatever it is you wanna jabber about. Seriously dude. ROFL. And then they just started fighting with each other like on Jersey Shore or something.

And it was sooooo awkward. 'Cuz like, everybody could see it, 'cuz it was all public on facebook and stuff, and Obama's been trying so hard to be friends with these guys. They should just totally get together in a room and make it all work out or something. That'd be sure to work, and then we could all just party again like we did in the 90s when everything was cool with everybody. Well, besides that thing where those same guys had girl trouble with that one guy Bill something or other and tried to kick him out. But still, those were some gooood times. 'Cuz this totally sucks.

Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.

S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties. New York-based S&P stripped the U.S. of its top rank on Aug. 5, saying Washington politics were making the country less creditworthy.

Kaufman Brothers analyst Michael Burton today initiates coverage of Nvidia with a Buy rating and an $18 price target, arguing that the company has upside in the mobile market and that it should continue to see gains in its graphics chip business.

Although competition is tough for tablet and phone chips, the growth of the smartphone market alone, which should reach 500 million units next year, “should help to support strong growth rates for the company over the longer term as it benefits (with others) from the convergence of mobile computing, tablets and smartphones,” writes Burton.

Although Nvidia will at some point be challenged by cheaper graphics offerings from Intel (INTC) and Advanced Micro Devices (AMD), it will continue to benefit right now from high “attach rates” of discrete graphics chips (GPUs) going into computers based on Intel’s “Sandy Bridge” processor platform, as the company did last quarter, he thinks.

Also, the purchase this year of wireless chip developer Icera is a “great strategic fit” for the company in both high-end and mainstream mobile devices, he thinks.

Burton’s estimates for this year and next are slightly above consensus. He models $4.14 billion in revenue and $1.04 in EPS this fiscal year ending in January, versus the consensus $4.12 billion and $1. And for 2013 he sees $4.54 billion and $1.20 versus $4.45 billion and $1.14 on the Street.




We plan on being in business for at least the next twenty years and with this in mind we are changing the frequency and content of our internet posts. We will maintain our concentration on market activity while we simplify our business day. We have been writing about the markets for 27 years - on a daily basis for 12 years - and giving investment advice for 45 years. Our guess is that while we haven’t seen and said it all we are pretty close to having exhausted any new words of wisdom we might wish to convey. Markets don’t repeat but they do rhyme. By not posting dally we will be freed up to do some summer/winter activities such as gardening/snowshoeing, riding our horses, walking the dogs and spending a bit more time with the prince and princess when they visit. And so we are going to end our lengthy daily comments but we will continue to post periodically when market events warrant and/or when there is activity in the Model Portfolio.




















This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Website Information

For those folks who have accounts with us, you may now go to: https://eview.mesirowfinancial.com and fill out the account information and view your accounts online. If you have trouble filling out the form, or in getting online, call and we will help you with the process. NASD regulations require the eview site to be secure. Thus your password must be changed every ninety days. You will be prompted to make this change when needed.

For information on Mesirow SIPC and Excess SIPC protection SIPCmesirow.pdf.

For those clients of LY& Co and other interested persons the Quarterly Report on the routing of customer orders under SEC Rule11Ac1-6.
For Quarter Ending 09/30/2002 For Quarter Ending 12/31/2002 For Quarter Ending 03/31/2003
For Quarter Ending 06/30/2003 For Quarter Ending 09/30/2003 For Quarter Ending 12/31/2003
For Quarter Ending 03/31/2004

All future SEC Rule11Ac1-6 Quarterly reports may be found by visiting the diclosures at LY& Co Clearing Broker Mesirow Financial at: http://www.tta.thomson.com/reports/1-6/msro/.

Annual offer to present clients of Lemley Yarling Management Co. Under Rule 204-3 of the SEC Advisors Act, we are pleased to offer to send to you our updated Form ADV, Part II for your perusal. If any present client would like a copy, please don't hesitate to write, e-mail, or call us.

A list of all recommendations made by Lemley Yarling Management Co. for the preceding one-year period is available upon request.

Summary of Business Continuity Plan

309 W Johnson Street Apt 544, Madison, Wi 53703 312-925-5248
The factual statements herein have been taken from sources we believe to be reliable but such statements are made without any representation as to accuracy or completeness or otherwise. From time to time the Lemley Letter, or one or more of its officers or employees, may buy and sell as agent the securities referred to herein or options relating thereto, and may have a long or short position in such securities or options. This report should not be construed as a solicitation or offer of the purchase or sale of securities. Prices shown are approximate. Past performance is no indication of future performance.